In their letter to the UN, the Syrian authorities have expressed their commitment to observe the obligations entailed by the convention even before its entry into force for the country
The United Nations on Friday said that it received documents from the Syrian government on joining the Chemical Weapons Convention, which outlaws their production and use.
In a statement, the UN, said, “The Secretary General (Ban Ki-moon) received a letter from the Government of Syria, informing him that President (Bashar) Al-Assad has signed the legislative decree providing for the accession of Syria to the Convention on Prohibition of Development, Production, Stockpiling and Use of Chemical Weapons and on their Destruction of 1992”.
In their letter, the Syrian authorities have expressed their commitment to observe the obligations entailed by the convention even before its entry into force for Syria, a spokesperson of the Secretary General said.
Ban welcomed this development, noting that, as a depository of the convention, he has long called for universal accession to the Chemical Weapons Convention.
“Given recent events, he hopes that the current talks in Geneva will lead to speedy agreement on a way forward which will be endorsed and assisted by the international community,” the UN statement said.
The Chemical Weapons Convention requires all parties to declare and destroy all of the chemical weapons they possess.
Syrian President earlier told Russian TV the papers were being sent and that it would submit the weapons data one month after signing.
The US accuses the Syrian regime of carrying out chemical attacks against its own people in which more than 1,400 people were killed.
The Syrian government had denied the allegation and blamed rebels for the attack in the Ghouta area of the capital, Damascus, on 21st August.
The move came as US Secretary of State John Kerry and his Russian counterpart Sergei Lavrov held a comprehensive meeting in Geneva on resolving the Syrian crisis to bring its chemical weapons under international control.
In the absence of rules providing for the conditions applicable to securitisation trusts for the Chapter XII-EA, the worst apprehensions of the industry may come true, as the whole Chapter would become inoperative
The securitisation industry, it seems must learn to live with the environment of uncertainty. First the need for pass-through treatment for special purpose vehicles (SPVs) issue, then the service tax issue and more. With great efforts to voice its concerns before the finance ministry, the Finance Act, 2013 came up with special provisions for securitisation trusts. The newly inserted provisions gave immediate relief, but left the industry in doldrums for sometime. Like a pendulum, the industry has been swinging between choosing direct assignments and pass through certificates (PTCs) route.
With the introduction of the special provisions for securitisation trusts, the securitisation industry has been on tenterhooks waiting for the rules “as may be prescribed” to be notified by the authorities sooner than later. While one of the rules was notified on 4 September 2013, the larger issue still remain unaddressed.
Background for rules relating to securitisation trusts
Clause 30 of the Finance Bill, 2013 (now Act) inserted a new Chapter XII-EA consisting of new sections 115TA, 115TB and 115TC in the Income Tax Act with regard to special provisions relating to tax on distributed income by securitisation trusts.
Section 115TA – 115TC (along with the explanations) of the Chapter provided for the Income Tax Authorities to prescribe two set of rules. One, section 115TA sub-section (3) states that –
(3) The person responsible for making payment of the income distributed by the securitisation trust shall, on or before the 15th day of September in each year, furnish to the prescribed income-tax authority, a statement in the prescribed form and verified in the prescribed manner, giving the details of the amount of income distributed to investors during the previous year, the tax paid thereon and such other relevant details, as may be prescribed.
Second, the explanation (d) to the Chapter provided for the meaning to securitisation trusts, as below -
(d) "securitisation trust" means a trust, being a-
(i) "special purpose distinct entity" as defined in clause (u) of sub-regulation (1) of regulation 2 of the Securities and Exchange Board of India (Public Offer and Listing of Securitised Debt Instruments) Regulations, 2008, made under the Securities and Exchange Board of India Act, 1992 (15 of 1992), and the Securities Contracts (Regulation) Act, 1956 (42 of 1956), and regulated under the said regulations ; or
(ii) "special purpose vehicle" as defined in, and regulated by, the guidelines on securitisation of standard assets issued by the Reserve Bank of India,
which fulfils such conditions, as may be prescribed.'
The first set of rules in relation to the statement providing details of the income distributed and tax paid thereon have been notified by the Department of Revenue (Central Board of Direct Taxes) on 4th September, 2013.
Under Rule 12BA, the statement of income distributed has to be furnished by the securitisation trust in Form 63AA and is to be duly verified by an accountant. Among the basic details required of the securitisation trust, the Form has two very significant details requirement. The form requires the securitisation trust to confirm whether it is regulated by Securities Exchange Board of India (Public Offer and Listing of Securitised Debt Instruments) Regulation, 2008, or whether the securitisation trust is regulated by the Reserve Bank of India guidelines on securitisation of standard assets.
The form requires the securitisation trust to confirm if they are regulated by either of the regulators. The issue here is what if the securitisation trust does not fall under either of the regulations? Will the securitisation trust be still bound by the requirements under the rule or the conclusion is to be drawn that there cannot be a securitisation trust which is not regulated by either of the entities. If one has to take a liberal view on the issue, it only requires the trust to confirm if there is a regulatory body under whose periphery it falls, it does not prohibit a securitisation trust which is not regulated by either of the bodies.
The requirement for furnishing such a statement was on or before 15th September each year, as provided in Chapter XII-EA. Hence the rules were notified timely.
Where are we now?
However, the bigger concern is rules relating to securitisation trust to fulfil certain conditions that were to be later prescribed for the securitisation trusts to fall under the provisions of the Chapter.
What is surprising is that the authorities have not yet come out with these rules which seem the backbone of the very Chapter; without which it can be argued that the machinery itself is not complete. Currently, there are no conditions prescribed for the securitisation trusts to fall under the provisions of this Chapter and applicable rules thereof. On the other hand, it surely cannot be assumed that there shall be no conditions applicable to such securitisation trusts to fall under the periphery of such rules.
These rules have been the much awaited rules, which the department has not yet considered notifying while the Chapter has come into effect from 1 June 2013. In absence of rules providing for the conditions applicable to securitisation trusts for the Chapter to become applicable to ‘such trusts’ the worst apprehensions of the industry may come true as the whole chapter would become inoperative.
Between the rules on the reporting requirement and the operative rules, the latter rules were not only much awaited but also are the base on which the entire Chapter shall function. While the securitisation trusts are continuing to fulfil the requirements of the Chapter in absence of the conditions, the lurking uncertainty has certainly not come to rest as yet. Stuck between Scylla and Charybdis, are we waiting for another roller coaster?
(Nidhi Bothra is executive vice president at Vinod Kothari Consultants Pvt Ltd. She can be contacted at [email protected])
There appears to be no other suitable alternative but accept or introduce a dual exchange rate to be kept operational for a year at least
In the last six months, the rupee has lost 13.83% of its value and after touching a low of Rs68.85 against the US dollar, is slowly recovering. Its movement is still very uncertain though experts predict its return to anything between Rs55 to Rs60 range. The intrinsic value of the rupee is probably Rs57 to a dollar, which remains to be seen.
In the interim, exports in certain areas are picking up while major dollar expenses like oil, gas and coal have remained practically unchanged.
Both importers and exporters who took the defensive hedging mechanism have much less worry than the rest who did not foresee the possibility of this great fall.
Media reports indicate huge stock pipe of coal at the ports with importers unwilling to take delivery due to higher rupee element, as it has become costlier by 14% or so. Non-clearance will additionally impact them with demurrage that is being incurred.
Already, the ports are overburdened with more than 3.5 million tonnes of coal. Domestic production, which has increased, also has resulted in stockpiles at pitheads and elsewhere leading to a deteriorating situation. The international price of coal which was around
$85 a year ago has come down to $77, almost a 19% drop, due to lower Chinese offtake, but fall in rupee value has effectively balanced the advantage.
What should the government do to ensure the removal of coal at port and move them to the stockyards of power generators? If the power generators have to pay higher price, because of the increased rupee burden, surely, they will pass it on to the consumer. This is a vicious circle.
To resolve this issue speedily, all privately imported coal, of high grade thermal variety, be directly consigned to power generators with a specially fixed rate of exchange, to be determined by the Finance Ministry/ Reserve Bank of India, to nullify the devaluation effect. Perhaps, the rate of exchange, as was applicable (or available) at the time of opening of letter of credit for purchase, could be used a guideline. Effectively, we are thinking in terms of having a dual exchange rate to overcome the current impasse and manage the CAD (current account deficit) also.
In a likewise manner, all imports of oil, gas and fertilisers, whose import contracts are valid, be given this special rupee exchange rate, so that the government does not have to go through the usual process of subsidising the costs later. For the fertiliser industry alone, the total amount of subsidy runs to a staggering Rs30,000 crore.
Agriculture, which thanks to the monsoon, can expect a better kharif production has millions of farmers using diesel pumps in their fields and increase in fuel supply costs which is bound to happen due to rupee decline, will impact their livelihood and, ultimately, their production.
This rupee fall effect leads to a vicious circle that can be only slowed down by greater exports and reduced imports, supported by increased production and export of foodgrains and industrial products. Revival of export of iron ore would also help, apart from expeditious clearances relating to increase in production of oil and gas from indigenous sources.
At the moment, there appears to be no other suitable alternative but accept or introduce a dual exchange rate to be kept operational, for a year at least.
(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce. He was also associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US.)